o/s market news

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    European Stocks Resume Rally, DAX Finishes Above 5,000 - European Commentary

    European stocks rose sharply on Wednesday, resuming their recent rally after a pause during Tuesday's session. The advance took the region's main equity indices to new multi-year highs.

    The UK's FTSE 100 index climbed 47.50 points to 5,494.80 and France's CAC 40 advanced 52.83 points to 4,599.63. The German DAX was the best performer in the region, rising by 1.7% and closing above the 5,000 mark. The index finished at 5,048.74, up 82.86 points on the day.

    Stocks See Another Choppy Trading Session - U.S. Commentary

    Stocks turned in another lackluster performance on Wednesday, though the Dow was able to eke out its third consecutive day of gains. There was some buying interest at the start of trading as Wall Street attempted to shake off the malaise of the past couple sessions, but a rebound in oil prices limited the gains.

    After modest gains on Monday and a mixed performance on the following day, the major averages ticked up at the start of trading. Stocks held modest gains through the first couple hours of trading, but an oil rally in the middle of the day sparked a sell off in stocks. Crude prices moderated a bit during mid-afternoon, allowing the major averages to recover somewhat, though they were unable to return to their intraday highs.

    The Dow climbed by about 17 points, its third consecutive day of gains. During its recent streak, however, the blue chip average has only recorded a total advance of about 50 points. The Nasdaq finished slightly below the unchanged mark. Dow +16.88, Nasdaq -1.02, S&P 500 +1.23. NYSE Adv/Dec 1665/1610, Nasdaq Adv/Dec 1248/1730.

    The gold sector climbed 2.3% on the day, but this only continued the choppy trading of the last several days. The group remained in a trading range that has held it for nearly 2 weeks. While a number of technology sectors gave up at least a portion of their early gains, the networking space finished near its intraday highs with an advance of 2%. Ciena (CIEN) gained more than 10% on the session, while Tellabs (TLAB) set a fresh peak with a 4.7% gain.

    Energy stocks had a choppy session, but finished among the day's most conspicuous gainers. Weekly petroleum inventory statistics helped push the group into negative territory during the mid-morning, but a rebound in oil prices during the middle of the day helped spark a rally that lasted into the close. The oil space climbed by 1.2%, while the natural gas space advanced 1% and reached a new high.

    Retail stocks held near the flat line early in the session, but a sell off during the late morning and early afternoon took them into negative territory. The sector finished among the day's worst performers with a loss of 1.3%. Bank stocks also suffered from a mid-day swoon and were unable to recover during the afternoon. The S&P Banks Index dipped to a new 52-week low.

    The housing sector dropped early in Tuesday's trading after a steeper-than-expected drop in August new home sales. While the group recovered by the close and finished near the flat line, selling pressure once again hit housing stocks at the start of trading on Wednesday, partly as a result of industry data that showed a decline in mortgage loan applications in the most recent week. The sector finished off its intraday low, but still lost nearly 1% on the day.

    The Commerce Department revealed Wednesday morning that durable goods orders climbed by a seasonally adjusted 3.3% in August, higher than the rise expected by economists. The advance in August partially reversed a revised 5.3% decline in July.

    The Department of Energy's Energy Information Administration revealed that crude oil inventories dropped by 2.4 million barrels for the week ended September 23. Gasoline inventories posted a week-over-week advance of 4.4 million barrels, adding to the 3.4-million-barrel gain posted in the prior week. Gasoline stocks are now only 2.9% below their levels of last year.

    The Mortgage Bankers Association revealed that its market composite index of mortgage loan application volume decreased by a seasonally-adjusted 6.6% for the week ended September 23. The MBA's refinance index showed a 10.5% decline for the week, while its purchase index fell by 3.4%.

    The final reading of second-quarter Gross Domestic Product is scheduled to be released before the opening bell Thursday. Economists expect the broad measure of the economy to show a growth rate of 3.3%, unrevised from the preliminary estimate given last month.

    Weekly employment data is also due to be announced before the start of Thursday's trading. Economists expect initial jobless claims to come in at 400,000 for the week ended on September 24, down from the previous week's mark of 432,000. Initial claims have been inflated over the past couple weeks by filings made by those impacted by Hurricane Katrina.

    Asian Markets Climb, Boosted By Gains In Bank Stocks

    The major Asian markets generally finished higher on Wednesday, helped by gains in bank stocks. Japan's main equity index climbed nearly 1%, more than reversing the previous day's mild profit taking. The Korean market climbed by more than 1.5%, while India recorded an advance of just under 1%.

    The Japanese Nikkei 225 index climbed 125.87 points to 13,435.91. Hong Kong's Hang Seng index rose by 31.58 points to finish at 15,221.46.

    McCormick's Q3 EPS Rises From Last Year

    Before the opening bell Wednesday, McCormick (MKC) revealed earnings for the third quarter of $0.35 per share, up from $0.33 per share in the same period last year. Wall Street analysts had expected the company to make $0.34 per share. Sales for the period were $622.7 million, the spice maker said, up 1.5% from last year's level of $613.5 million.

    Eastman Kodak's Digital Earnings From Operations Will Not Reach Prior Target

    Eastman Kodak (EK) stated Wednesday that its digital revenue growth for 2005 will be above its forecast, but digital earnings from operations will not reach its previous target. The company said the disappointing digital earnings growth stems from lower-than-expected earnings growth in the Health Group, and the possibility of slower U.S. economic growth for the balance of the year.

    STERIS Projects Quarterly Earnings Below Analysts' Consensus

    STERIS (STE) revealed Wednesday that it now sees earnings for the September quarter of $0.21-$0.22 per share, below analysts' consensus of $0.27 per share. The company blamed the new guidance on weaker operating margins, in part caused by lower-than-expected demand for various products in its surgical support business unit and increased costs from rising fuel prices. The company also announced that it has agreed to sell its freeze dryer product line and has decided to keep its water purification product line.

    Incyte Says FDA Requests Another Phase II Trial For Reverset

    Incyte (INCY) reported Wednesday that the FDA did not approve a move into phase III trials for its Reverset HIV drug and requested that the company conduct another phase II trial. Incyte said it will carefully review the regulatory agency's input to determine how best to conduct a second phase II study, as the trial could be considered 1 of 2 registration trials.

    Mylan Labs Reveals Favorable Ruling In Patent Litigation

    Before the opening bell Wednesday, Mylan Laboratories (MYL) revealed a favorable ruling in its Oxybutynin patent litigation with Johnson & Johnson's Alza Corp. subsidiary. The company said the court held that its unique delivery system did not infringe Alza's patent, which was found to be invalid as anticipated and obvious.

    Noven Pharma Says FDA Does Not Expect To Approve ANDA For Generic Duragesic

    Noven Pharmaceuticals (NOVN) revealed Wednesday that the FDA does not expect to approve its Abbreviated New Drug Application for a generic version of Duragesic, a treatment for chronic pain. The company reported that the decision follows a public advisory issued by the FDA regarding reports of serious side effects and death from overdoses of both branded and generic versions of the product. Noven stated that it has about $13.9 million in inventories of the pain treatment currently on its balance sheet. With Endo Pharmaceuticals, a licensee for the product, agreeing to share the cost, Noven expects to record a charge of up to $9 million related to inventories and it is evaluating the possible recognition of $5.8 million in previously deferred license revenue.

    Finlay Enterprises Details Impact Of Federated Restructuring

    Finlay Enterprises (FNLY) reported Wednesday that as a result of Federated Department Stores' integration plans regarding its merger with May Department Stores, Finlay expects to no longer operate in 194 locations. The company said these stores represented $242 million in revenue in fiscal 2004, or about 24% of its projected 2005 sales. The company does expect to gain about 11 new doors as a result of the realignment, representing an estimated $15 million of annual revenue.

    Vincor Rejects Offer From Constellation Brands

    Vincor International (VN.TO) announced Wednesday that it has rejected an unsolicited bid from Constellation Brands (STZ). While it has not received a formal offer, the Canadian wine maker stated that Constellation has approached it with a bid of C$31 per share. Vincor deemed the offer inadequate, citing its future earnings prospects and the significant synergies that Constellation would receive from the acquisition.

    IPIX Corp. Terminates Exclusive Arrangement With NMI

    IPIX Corp. (IPIX) revealed Wednesday that it has terminated NMI's exclusive arrangement to operate in the UK, Ireland, Italy and Switzerland. In announcing its decision, the supplier of digital surveillance systems reported that NMI, which will continue to have a non-exclusive contract, was unable to effectively sell products or find resellers. IPIX said it is in talks with several large international distributors in order to penetrate the European security market.

    GM Reaches Deal With Canadian Auto Workers Union

    The Canadian Auto Workers union announced that it has reached a tentative 3-year agreement with General Motors of Canada. The deal, which was reached just before a midnight deadline, featured the same economic gains included in earlier settlements with Ford (F) and DaimlerChrysler (DCX). According to the CAW, GM (GM) agreed to base wage increases, pension improvements and a restructuring incentive to encourage senior workers to take early retirement in cases of downsizing.

    Downgrading MGI Pharma To Market Perform Based On Lower Aloxi Expectations And Launch Of A Generic Version Of Zofran - Piper Jaffray Comments

    Wednesday, Piper Jaffray downgraded MGI Pharma Inc. (MOGN) to Market Perform from Outperform and reduced the price target to $25 from $30. Further the brokerage reduced the earnings per share estimates for 2005 and 2006. Analyst Mark Karvosky noted that the company has revised its guidance on Tuesday. The analyst also reduced Aloxi expectations to $250 Million and $295 Million respectively for 2005 and 2006. Further Piper Jaffray said there is an anticipation of a generic version of Zofran entering the market late 2006, providing extra competition for the company. The brokerage expects FDA approval for the company's Dacogen during the second quarter 2006. The brokerage believes that this will not provide much excitement to the investors. The brokerage's first year estimate for Dacogen is $22 million. Concluding, Mark Karvosky reduced earnings per share estimate for 2005 to $0.20 from $0.27. Further the analyst reduced 2006 earnings per share estimate to $0.40 from $0.59.

    Downgrading Novellus To Underweight; Lowering Estimates –JP Morgan Comments

    Wednesday, JP Morgan downgraded Novellus Systems, (NVLS) to Underweight from Neutral due to various reasons. According to analyst Jay Deahna, the risk to CVD business is riskier now than previously thought.

    Upgrading WPP Group To Overweight Based On Valuation - Prudential Financial Comments

    Wednesday morning, Prudential Financial upgraded WPP Group plc (WPPGY) to Overweight from Neutral Weight and raised its 2006 earnings per share estimates. The brokerage said it has a positive industry rating for advertising and marketing services. Further Prudential maintains the price target of $61 for the company. Analyst Steven Barlow noted that the stock was trading in its low 50's since its first half 2005 earnings release. Steven Barlow noted that there is confusion about how new IFRS accounting standard would be impacting the company margins. Prudential Financial said the company margin goals for 2007 are rational due to new business wins gained last year and its hub on BRIC countries helps the company have a clear lead over its rivals. According to the analyst, the company would have organic revenue growth of 4.5%-5.0% for the year. Concluding, Prudential raised its 2006 earnings per share estimate to $3.58 from $3.56. Currently the stock is trading at $51.70 up 0.49 cents.

    Initiating Pharmion At Underperform - Friedman Billings Ramsey Comments

    Wednesday morning, Friedman Billings Ramsey initiated coverage of Pharmion Corp. (PHRM) with an Underperform rating and set a price target of $18. The brokerage noted that Pharmion, a profitable biotech organization, deals in two cancer treatment drugs. One is Vidaza, used for treating myelodysplastic syndromes (MDS), and the other is a pill sold abroad under the name Thalidomide Pharmion for multiple myeloma. Analyst Jim Reddoch, noted that drug Vidaza will have problems when Supermen's drug Dacogen is introduced into the marker, during the first quarter of 2006. The analyst believes that Dacogen can seriously affect Vidaza's performance. Currently, Jim Reddoch expects Vizada sales to double for the year 2005 and reach $130 million. Overall Jim Reddoch noted that even without competition Vidaza sales would hit a plateau. The broker said the other drug Thalidomide Pharmion sales for the company will be affected by Celgene's Revlimid. According to the brokerage, Thalidomide Pharmion sales will increase by 29% and achieve $84 million for the year 2005. The street expectation for the drug for 2006 is placed at $98 million, which is at risk because of Raelimid's availability as a named patient basis and market drug starting 2007. The brokerage noted that the company sales would reduce by 25% when Revlimid becomes available. Friedman Billings Ramsey introduced earnings per share estimate of $0.58and $0.89 for 2005 and 2006 respectively for the company Pharmion is currently trading at $21.73 down 0.32 cents.
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